Could this be the last year for the big chains?

[Latinandgreek]

Originally Posted by MV64

I love going into bookstores like Barnes and Noble, but honestly, if the chains collapse, we may see a resurgence in mom and pop bookstores, which would be a great thing.

I used to love the mom and pop bookstores. I would love to see a resurgence of mom and pop bookstores and used bookstores. I used to love taking my new books (that I bought on my break) home in a paper bag...

[Andrew H.]

Originally Posted by MV64

I love going into bookstores like Barnes and Noble, but honestly, if the chains collapse, we may see a resurgence in mom and pop bookstores, which would be a great thing.

We won't.

Offering a smaller selection at higher prices is going to be an even less viable model in the future.

But I want to echo Kali's point that this is not really about e-books. B&N and Borders have been bleeding customers to Amazon for about 10 years - and starting about 2005, Amazon had double digit growth every year (often 20-30%) while Borders and B&N had no growth, very low growth (1-2%), or even a small loss. The vast majority of people still buy paper books - but they're buying them at Amazon.

And part of the problem is that Borders and B&N massively over-expanded in the 90's/early 2000's. There are a lot of locations with a Borders and a B&N within a half-mile of each other - just closing down one of those competing shops would do a lot for the bottom line of the remaining shop.

[fjtorres]

Originally Posted by mldavis2

I'm not so sure the eBook revolution is as rampant as some think.
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Retail stores will have time to turn themselves into specialty outlets if they wish to survive.

eBooks aren't the primary reason the superstores are at risk; they are merely the final nail in a coffin long in the making.

The retail stores have *had* 15 years to adjust to the new market reality and have frittered away 14 of them.
Amazon.com was founded in 1994.
The PalmPilot was introduced in 1996.
The Rocketbook was introduced in 1998.
Even the Kindle is already 3 years old.

It is only recently that Borders and B&N have setup online *print* book stores; for years Borders.com was actually a mirror site run by Amazon. (People forget there is a whole lot more to Amazon than books. They do a ton of business hosting online computing, for example.)

Borders and B&N simply thought that online shopping was a fad and that what worked in the 90's would keep on working until the end of time. The problem is, unlike certain european nations that will go nameless, the US book marketplace is open and competitive; consumers dictate what works and what doesn't by voting with their wallets, not bureaucrats and politicians and publisher associations.

In the past 15 years, people have gotten used to online shopping; they appreciate that it is a safe, economical way to shop for dry goods and commodities. And over that same time, the BPHs, so enamoured of volume have shifted away from balanced revenue streams towards high-volume "blockbuster" sellers which are, in effect, commodities.

It isn't ebooks that are killing the bookstores; it's the BPHs.
It takes no skill or added value to sell the latest James Patterson novel. You just put up a sign, fill up a rack, and sit back to collect the money, right? Well, guess what? WalMart can do that. Target can do that. Buy.com can do it. And Amazon can really really do that and more.
The more the industry relies on the monster sellers, the more money goes to the commodity books, the more comfortable buyers get used to the competing channels. And the more space the megastores devote to the Bestsellers the less space they offer to the midlist and backlist.
Add in that the online vendors (Amazon, yes, but also buy.com, Powells, and others) offer deeper catalogs than even the biggest megastore could possible stock and you end up with the current scenario where the stores are too big to live off commodity, low-margin bestsellers, and too small to carry a customer-satisfying catalog that can compete with online.

Going to a bookstore for anything but a bestseller or recent release these days is a hit or miss proposition. You could drive 20-30 minutes to the nearest Borders or B&N (because most of the mall stores are being shut down) and get lucky and actually find a copy at something close to list price. Or you might have to special order it and wait a week or so to get it, at something close to list price.
Alternately, you could just go online and order it with next day shipping at something close to list price, or get it a week or so later at a significant discount.
A lot of people are choosing to save themselves the russian roulette number and just going for online. It is a faster, more predictable shopping experience.
Of course, there are those who are into instant gratification. And for those we have ebooks: ebooks also offer a vast catalog, lower pricing (when dealing with rational publishers, anyway), *and* instant access.

The modern book market is schizophrenic; the BPHs have made it so.
You have a high-volume, low margin, high-turnover business built off "surefire" bestsellers that command massive up-front advances and get enormous publicity campaigns.
And you have a low-volume, slow-moving, higher margin midlist/back catalog business that commands little if any respect from the BPH execs but really makes the backbone of the industry.
The megastores are suited to neither.
Their overhead means they can't match the dept stores on the commodity bestsellers *or* the online vendors on the deep catalog slow movers.

The thing to remember is that the bookstore's problem isn't that they don't have a *lot* of customers. It's that they don't have *enough* to cover their costs. These stores have been hanging on by the skin of their teeth (or their latte and pastry counters) for years now. Each year things got slightly worse and they looked to trim costs a bit here a bit there; hire cheaper labor, feature less copies of the back catalog, send unsold bestsellers back quicker...

And now you have ebooks syphoning away some of the more afluent prolific buyers. In absolute terms it's not a big number of customers. In sales volume, it is a significant number, because of the buyer's habits. (Word is ebooks might rack up a billion dollars in sales this year.) Some of it is coming from the online print sales side of the ledger, some is new customers, some if coming from the dept store side of the business. But some of it *is* coming out of the megatores' customer base. And right now they can't afford *any* defections.

It's a house of cards just waiting for the faintest of breezes.

[fjtorres]

Originally Posted by Andrew H.

And part of the problem is that Borders and B&N massively over-expanded in the 90's/early 2000's. There are a lot of locations with a Borders and a B&N within a half-mile of each other - just closing down one of those competing shops would do a lot for the bottom line of the remaining shop.

Absolutely true.
And there are lots of locations with large afluent popuations with neither.
It's like they both took a look at each other's sites and decided to try to kill each other by making their own stores unprofitable. They chose they newest sites based on how much they could damage the other rather than by market needs.

Basically, they're locked in a staring contest, daring the other to blink...
...and they're standing on the deck of the Titanic...

[MV64]

Originally Posted by Andrew H.

We won't.

Offering a smaller selection at higher prices is going to be an even less viable model in the future.

But I want to echo Kali's point that this is not really about e-books. B&N and Borders have been bleeding customers to Amazon for about 10 years - and starting about 2005, Amazon had double digit growth every year (often 20-30%) while Borders and B&N had no growth, very low growth (1-2%), or even a small loss. The vast majority of people still buy paper books - but they're buying them at Amazon.

And part of the problem is that Borders and B&N massively over-expanded in the 90's/early 2000's. There are a lot of locations with a Borders and a B&N within a half-mile of each other - just closing down one of those competing shops would do a lot for the bottom line of the remaining shop.

I disagree about the mom and pop bookstores not succeeding.

We are witnessing the "smaller selections" already. BN hardly carries any diversity of titles anymore, even popular classic authors aren't getting on the shelves.

A well run mom and pop bookstore could cater to the needs of the local interest and while prices could be higher (but then again BN charges full retail so this is unlikely) the store would only need a smaller client base to be successful. I think it could work. Also, a smart idea for mom and pop bookstores would be to offer ordering of books for people like the big chains do, but use something like Amazon.

Then again, the only business I'd ever have an interest in running would be a book store/cafe.

[DMcCunney]

Originally Posted by HarryT

Are Borders big in the US? I don't think anyone really noticed when they went bust here in the UK - they only had 30-odd stores compared to Waterstones' hundreds.

They are the second largest US bookstore chain after B&N, with Books-A-Million in third place, with operations in 19 states and 200+ outlets.

Borders Group also owns Waldenbooks, which is mall only operator, and some Waldenbooks outlets have been renamed Borders Express.
______
Dennis

[DMcCunney]

Originally Posted by Connallmac

I saw this article on Msnbc.com this morning and it paints a pretty grim picture for both Borders and Barnes & Noble, especially for the former. Could we possibly see both big chains slide into Chapter 11 next year? It seems a very real possibility, given the overall slide in book sales and the cannibalization of pbook sales by ebooks. Especially when you consider how late to the ebook game Borders was and the fact that it hasn't been a particularly well managed chain. Perhaps by this time next year we will have no Borders, and a smalled B&N chain?

The fly in this ointment is a hedge fund - Pershing Capital Management. Pershing owns about 40% of Borders Group stock, and has committed to help raise the funds for Borders to try to acquire B&N.

http://www.huffingtonpost.com/2010/1..._n_792449.html

Pershing will want to combine the two, close stores, cut costs, and try to boost the stock price of the resulting entity so they can make a healthy profit buying low and selling high. One question is whether the merged entity will be viable. Another question is who would buy Pershing's holdings. Brick and mortar bookstores aren't what I'd call an attractive investment at the moment.
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Dennis

[GA Russell]

In 1985 I moved to Atlanta, and was delighted to find a small shop called The Science Fiction & Mystery Book Store.

It was operated by two guys. One knew everything about one genre, and the other about the other.

It was a small shop, but they seemed to have everything in print for those two genres. That's all they sold. No books of any other type.

Assuming that the shop is in an appropriate location, I think that a mom & pop bookstore can succeed by matching Amazon's inventory of a particular subject. And Mom or Pop would have to be a knowledgeable enthusiast of that subject.

[Fbone]

Originally Posted by fjtorres

It takes no skill or added value to sell the latest James Patterson novel. You just put up a sign, fill up a rack, and sit back to collect the money, right? Well, guess what? WalMart can do that. Target can do that. Buy.com can do it. And Amazon can really really do that and more.

Can you imagine if all the stand alone bookstores closed and the only place the general public could purchase books in person was Walmart and Target?

We would have such limited availability people may think Patterson, Roberts and King are the only authors writing books.

[fjtorres]

Originally Posted by Fbone

We would have such limited availability people may think Patterson, Roberts and King are the only authors writing books.

And isn't that the way the BPHs are acting already? Cutting off even successful quality writers just because they aren't that marketable?
(Never mind the fact that they don't even *try* to market them?)

Whatever happens to brick and mortar stores for failing to adapt to the new marketplace, we shouldn't forget it is the BPHs that enabled it; both the rise of the dinosaur superstores and their (likely) demise.

[JeremyR]

Originally Posted by Fbone

We would have such limited availability people may think Patterson, Roberts and King are the only authors writing books.

I actually wonder if that is not the real cause (or a big factor) to start with. You have a few authors completely dominating book sales. So there is little incentive for any store to carry anything else, all people want to read is what's being pushed by a handful of authors.

I mean, heck, 20 years ago, you'd find a bigger selection of books in a supermarket than you'd find today in a big bookstore (okay, not quite, but I would buy a lot of obscure SF/Fantasy books from Publix of all places, which is a chain grocery store in Florida. It wasn't even a big store)

I think that's also what hurt Blockbuster. Since the movie industry has moved to a blockbuster only model, with no room for anything else, you can get all the hits you want in a vending machine.

Blockbusters just suck up the air out of the rest of the market.

[elcreative]

Also requires the proprietors to be uninterested in earning a decent living... Run a specialist and you get treated as a fount of all knowledge re the subject and then the "customers" go hunting for the best deal and buy from Amazon... and I speak from experience having worked for a specialist outlet for over three years and managed one for nearly four. Can only compete on specialist services not price and at the end became a free source of information expected but not supported by purchases...

Originally Posted by GA Russell

In 1985 I moved to Atlanta, and was delighted to find a small shop called The Science Fiction & Mystery Book Store.

It was operated by two guys. One knew everything about one genre, and the other about the other.

It was a small shop, but they seemed to have everything in print for those two genres. That's all they sold. No books of any other type.

Assuming that the shop is in an appropriate location, I think that a mom & pop bookstore can succeed by matching Amazon's inventory of a particular subject. And Mom or Pop would have to be a knowledgeable enthusiast of that subject.

[Andrew H.]

Blaming BPHs for blockbusters is like blaming them for being in business. Like it or not, blockbusters are where the money is, blockbusters are *what customers want* and blockbusters make it possible for many lesser selling authors to exist in the first place.

It's not like B&N has scaled their stores down so that they only carry 100 books; the superstores still carry 50,000 titles. Most people just seem to want the big sellers. I really don't think businesses should ignore their customer's wants.

Re: Blockbuster Video. The failure of Blockbuster has nothing to do with blockbuster movies, as they predate the video store. Hence the title. It didn't really have much to do with their selection, either - I remember being overwhelmed they their huge selection when I went into my first one in the 80's...that was kind of their great selling point.

BB became successful in the age of videotapes, at the time when buying a movie on a tape cost $70. (And that was 80's money). The market changed with DVDs and with producers focusing on selling them directly to consumers: you could buy a new DVD for $18, or rent one for $4-5. But renting meant returning, and if you didn't return it, there would be big late fees attached. And then Netflix offered an easier way to rent, with no late fees and easy returns.

And then going into a crowded BB, hoping they had a movie you wanted, and dealing with returns...just became inconvenient.

[DMcCunney]

Originally Posted by GA Russell

In 1985 I moved to Atlanta, and was delighted to find a small shop called The Science Fiction & Mystery Book Store.

It was operated by two guys. One knew everything about one genre, and the other about the other.

It was a small shop, but they seemed to have everything in print for those two genres. That's all they sold. No books of any other type.

Assuming that the shop is in an appropriate location, I think that a mom & pop bookstore can succeed by matching Amazon's inventory of a particular subject. And Mom or Pop would have to be a knowledgeable enthusiast of that subject.

They can match Amazon's inventory on a particular subject. They cannot match Amazon's pricing.

The "mom and pop" shops are an endangered species because they can't compete on price.

Specialty bookstores like that stand the best chance of survival (and there are some specialty shops around me, though not SF or mystery), but it will be an uphill slog for them, too.
______
Dennis

[ebusinesstutor]

I agree with the others who mentioned that Amazon is more of the problem than ebooks. When I try to buy books at my local store, it is often lacking.

But Amazon has them all and with free shipping. More and more of my physical book purchases over the last year were from Amazon with the local chain getting less.

I am just starting to buy ebooks online as well.